Calif. insurance dept. slammed on alleged failure to provide annuity sales complaint data

The Life Insurance Consumer Advocacy Center has taken issue with the California Department of Insurance's refusal to provide consumer complaint data related to new annuity sales legislation.

Brian Brosnahan, co-founder and executive director, LICAC, asserted his group has a “legal right” to the information, which they have been requesting for months without success.

“We are hopeful that public interest in the issue will cause them to change their stance, which has no justification at all. I mean, we have a Public Records Act to allow groups to get this kind of information, and what the department is doing here is just not consistent with the law,” he said.

The California Public Records Act states that government records must be given to the public upon request, unless there is a legal reason not to do so or if certain exemptions apply.

At the time of this publishing, the CDI has not responded to requests for comments.

Clash over annuity sales legislation

The issue at hand surrounds CDI-sponsored Senate Bill 263. It was introduced in January 2023 and passed in February 2024.

The bill, “Insurance: Annuities and Life Insurance Policies,” was meant to require that insurers act in the best interest of the consumer by requiring them to establish, maintain and use a system to supervise recommendations for annuities. It also requires agents to disclose conflicts of interest.

However, several consumer groups — including the LICAC — oppose the legislation. They believe it weakens consumer protections, and also take issue with the fact that material conflict does not count as a conflict of interest.

While Brosnahan believes SB 263 “started out as a very strong consumer protection bill,” he claims the CDI “did a complete 180-degree about-face and went along with insurance industry efforts to rewrite the law so that it ended up being something that was absolutely not in consumer’s best interest.”

“This law allows agents to represent that they are acting in the best interest of consumers when that is not true… Even worse, from some standpoints, it allows the agent to represent that they have no material conflicts of interest with the consumer, but the law specifically defines material conflict of interest to exclude any financial interest, compensation-related interest,” he said.

As such, the LICAC wants to look at complaints related to life insurance and annuity sales since this new legislation was passed in an effort to determine whether the new law adequately protects and serves Californian consumers.

“We want this information in part because it will provide a baseline against which to compare complaints in the future… We think it will be very useful, over the course of several years, to see how complaints change — whether they go up, whether they go down, whether there are different kinds of complaints that are filed over time in the wake of this legislation,” Brosnahan said.

‘Confidential records’

The LICAC has been grappling with the CDI over this data since August 18, 2024. In a trail of emails viewed by Insurance News Net, the LICAC repeatedly requested complaint statistics and the CDI repeatedly shot down those requests.

The CDI pointed to data publicly available in its annual reports and on its website, directing the LICAC to glean the information being sought.

“What they don’t do in their annual report is they don’t break out the types of complaints by line of insurance, even though it’s obvious from what they do provide that they have the data. We pointed that out to them and we said, ‘Give us the reports or underlying data that you use to publish the annual report,’” Brosnahan explained.

However, the CDI denied that request as well. Ultimately, on November 8, it advised that some of the specific statistics requested do not exist, while other records are “privileged or confidential and exempt from disclosure.”

Brosnahan contests this response.

“The statute that they rely on requires them not just to invoke the privilege, but to actually demonstrate that these privileges apply. But they have refused to provide any explanation or demonstration of why the privileges they cite apply… The information can’t be confidential because they publish the same information in their annual report. We just want a different cut of the same data,” he said.

Demonstrating a need

For Brosnahan, a semi-retired attorney, the issue is tied to the original reason he and several colleagues founded the LICAC. He said he has seen numerous clients lose savings due to buying “ill-considered, ill-suited” life insurance and annuity products without adequate laws to prevent it.

“The specific information about complaints is very relevant to the need for regulation. If you have a lot of people filing complaints about life and annuity products, filing complaints about specific kinds of insurance and annuity products, that demonstrates the need for stronger protections,” he said.

The Life Insurance Consumer Advocacy Center is a non-profit consumer organization founded in 2020 and based in Pleasant Hill, California. It advocates for stronger regulations and consumer protection laws related to life insurance and annuities.

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